Market Perspectives

"Market volatility experienced in the last week of 2018 has been described as something no one has ever seen before. A 700-point decline in the Dow followed by a 1000-point rise the following day followed by a 600-point decline during the day only to end up 200 points above the prior close at the end of the day. The result was a dizzying investment moment. How to understand such persistent dramatic volatility? Is cash ultimately the only safe asset?"

Markets
As the quarter ends, the Dow Jones and S&P 500 indices, fueled by growth stocks’ appreciation, are at all-time historical highs, dominating the return from global investing. While the MSCI ACWI rose more than 3.5% for the quarter and 2% for the year, the MSCI ACWI-ex US was flat for the quarter and declined more than 5% year-to-date. In general, international equ ...

"Despite extreme international and domestic political risks, domestic equity volatility as reflected in the VIX, interrupted only by the prior quarter, was slightly below historical norms at levels that have persisted since March 2009 through the end of 2017. The U.S. equity market continued to outperform many international indices. It is a story very much associated with central bank policies..."

"This quarter marked an inflection point in market volatility. 2018 brings the first negative quarter for the US or global markets since 2015. These nine quarters of positive returns compare to the record 14 consecutive positive quarters for the S&P 500 ending in 1998. January began the quarter with another month of rising markets and low volatility, albeit with the dollar falling and interest rates rising, but then the market environment changed..."

"The fourth quarter of 2017 closely resembled much of the first three quarters – global markets continued to grow steadily, resulting in positive returns for many strategic domestic and global equity investors..."

"In economics as in real life, nothing comes without cost. The U.S. monetary stimulus program resulted in $4.5 trillion in Treasury debt. As the debt level is drawn down, a return to more normal long-term rates and a slowdown in economic growth is likely to result. The U.S. is far from alone..."

"In hindsight, it is strange that political turmoil since the beginning of the year did not affect the market. An extremely toxic political climate fostered by twitternomics and grim one-party rule policies is no safe road to a well-functioning economy. Yet the U.S. market seems to have hardly noticed..."

"The difficulty for understanding the current state of global capital markets is how to parse eight years of grinding, largely globally coordinated, central bank monetary macroeconomic policy relative to the release of political stalemate sentiment resulting from the Brexit vote and the 2016 Presidential election..."

4th Quarter 2016
Markets
The fourth quarter of 2016 was a profitable period for globally diversified multi asset managers. All major domestic large cap indices were up for both the quarter and the year. The S&P 500 was up 3.3% for the quarter and 9.5% year-to-date. The Dow Jones gained 7.9% this quarter and 13.4% for the year, while the NASDAQ was up 1.3% in the quart ...

3rd Quarter 2016
Markets
It was a profitable period for well-diversified multi-asset strategic investors in global equity markets. The S&P 500 was up 3.3% for the quarter and 6.1% year-to-date, the Dow Jones gained 2.1% this quarter and 5.1% for the year, and the NASDAQ was up an impressive 9.7% in the quarter and 6.1% for the year. Domestic small cap outperformed large ...